A lifecycle fund can help simplify your retirement investing

If you don't have hours to spend choosing and maintaining an asset allocation for your retirement account, consider a lifecycle fund, sometimes called a target-date fund. A lifecycle fund is an all-in-one investment option that offers you, in a single fund, a diversified portfolio with an asset allocation geared to the year in which you expect to retire.

A lifecycle fund's asset allocation reflects what its investment managers have determined is the optimal risk and return profile for a given time horizon ending with the fund's target year. You simply choose a fund with a target year that lines up with when you expect to retire. The target year is identified in the fund's name, making it easier for you to find a fund that's appropriate for you. For example, if you're 35 today and expect to retire in about 30 years, or in 2047, you might look for a fund with 2047 in its name.

A lifecycle fund is an all-in-one investment option that offers you, in a single fund, a diversified portfolio with an asset allocation geared to the year in which you expect to retire.

Most lifecycle funds invest in other mutual funds, which is known as a "fund of funds" strategy. When you're younger, your assets, along with all other assets of the fund, are invested more heavily in mutual funds that own equities, which are riskier than other asset classes but offer a greater opportunity for long-term growth of your investment. Over time, as you move closer to retirement, the fund's investment mix becomes more conservative, with a larger share of assets going into fixed-income mutual funds, which are generally less risky than equity funds. This planned, gradual shift toward lower-risk investments is known as the fund's "glide path." You don't have to worry about when or how to rebalance your retirement portfolio, because the fund does the work for you.

A lifecycle fund provides diversification and rebalancing in a single fund. If you invest in other funds in addition to a lifecycle fund, be aware that you could affect the asset allocation developed specifically for your retirement target date.

How to choose a lifecycle fund

Select a fund with a target year and glide path design that you're comfortable with, given your investment objectives. You can learn about a fund's glide path design in the prospectus for the fund or on our website. Also learn about expenses the fund charges.

Bear in mind that like any mutual fund, a lifecycle fund is subject to risk. The value of your principal, or starting investment, is not guaranteed at any time – not even in the target year.

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Diversification is a technique to help reduce risk. However, there is no guarantee that diversification will protect against a loss of income.

Please note, the target date for lifecycle funds is the approximate date when investors plan to start withdrawing their money. The principal value of the fund(s) is not guaranteed at any time, including at the target date.

Lifecycle funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. In addition to the fees and expenses associated with the lifecycle funds, there is exposure to the fees and expenses associated with the underlying mutual funds.

Please note that equity mutual funds are subject to market risk and volatility; fixed income funds are not guaranteed and are subject to interest rate, inflation, and credit risks.

This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.